US river freight system near breaking point as huge harvest looms

CHICAGO, Sept 25 (Reuters) - With a record U.S. harvest just
coming in, the river transportation system that is at the heart
of the nation's farm economy is overstrained by rising demand
for shipping capacity, a low barge inventory, and a dilapidated
lock system.

The pressure is building on an inland waterways network that
is just one flood, drought or mechanical breakdown from calamity
after decades of neglect, industry sources say.

Looming bumper corn and soybean crops are bringing to light
issues that have built for years and which have been exacerbated
by new entrants to the marketplace for river logistics, such as
producers of crude oil from the nation's shale boom.

Rail congestion and truck shortages are shifting more cargo
to the creaking infrastructure for floating heartland goods to
market.

As a result, the U.S. Agriculture Department expects the
cost to move grains from the Midwestern crop belt to export
facilities along the Gulf Coast to reach a six-year high during
October, the busiest harvest month of the year.

Concerns about transportation bottlenecks have eroded prices
that farmers receive for their grain, reduced the
competitiveness of U.S. supplies in the global marketplace and
elevated expenses for food and energy producers who could
ultimately pass the higher prices on to consumers.

Lower-cost grain suppliers in South America and eastern
Europe are undercutting U.S. prices. South Korea
and Taiwan, two top buyers of U.S. corn, recently purchased corn
from exporters in Brazil. Shipments of corn out of Ukraine are
the cheapest in the world, $8 per tonne less than U.S. grain.
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